Qartaba Homes' plan offers "100 per cent Halal housing to the growing Muslim community of Australia" in the heart of the northwestern Sydney suburb of Riverstone.AN interest-free housing project aimed at the Muslim community and boasting 100 per cent halal housing has sparked a major row, with critics labelling it a discriminatory plan that could lead to a Muslim enclave.

While the company has insisted people from all religious backgrounds are free to take up the offer, it advises that the loans are "100 per cent Halal" and a "chance to escape Riba (interest)" because interest is a sin under Islamic law.

Qartaba Homes director Khurram Jawaid said it was the real estate deal of a lifetime, open to Australians of all faiths and backgrounds, but the state MP for Hawkesbury Ray Williams said the project was divisive.

"I can only imagine the repercussions if a developer were to advertise a new Judeo-Christian housing estate; they would be hung, drawn and quartered," Mr Williams said.

"I hardly think the advertisement for a 100 per cent halal Muslim housing community is inclusive; it's very divisive and I'm sure it will be viewed that way by the majority of fair-minded Australians."Blacktown councillor Alan Pendleton said the community was concerned it could turn into an enclave.

"There's great concern about ... what they consider could be an enclave. (There's a belief) you have to be a Muslim, otherwise they won't sell you a site," Mr Pendleton said.

The Riverstone site of the proposed Muslim real estate development / Pic: Matthew SullivanSource: The Daily Telegraph

The proposed development is on land bordered by Riverstone Rd, McCulloch St and Cranbourne St with the company planning to subdivide the land, along with a smaller parcel in Gordon St, Schofields."Our philosophy is interest-free, pay as you own," Mr Jawaid said.

"You don't have to go to a bank or a financial institution.

"It's open to everyone.

"From the business point of view, we can't do it that way (Muslims only)."

While subdivision plans have yet to be presented to Blacktown Council, the company has already "booked out" virtually all of the proposed 150 lots in Riverstone and 30 in Schofields.

Land parcels range from 400sq m to 800sq m and are being offered at $85,000 plus charges, including a booking deposit of 30-35 per cent and a 24-30 month interest-free payment plan.

Blacktown Council is investigating the deal, with the mayor Len Robinson saying there is no application before council for a subdivision, but pre-lodgment plans have been given to council.

The company has bought the land from various owners, but Mr Jawaid said Muslim take-up of the offer was "not that overwhelming".

The aim is for work to be finished by 2014, but go-ahead is needed from Blacktown Council and Sydney Water, which has yet to connect the land to the water network.

A spokesperson for Fair Trading Minister Anthony Roberts said the department had found no grounds for discrimination action against the Qartaba Homes flyer.